Although Cell C will avoid getting involved in a capital expenditure war with rivals MTN and Vodacom, it will build South Africa’s best urban 4G/LTE network, Blue Label Telecoms co-CEO Brett Levy said on Tuesday.

Levy, who was speaking at an investment conference in Sandton arranged by Huge Group and the Wits Business School, said Cell C — in which his company recently acquired a 45% stake for R5.5bn — “will build the best 4.5G/LTE network that this country can offer”.

“We will have an exceptional 4.5G/LTE network, and when you step outside the network, you will roam. We have a great roaming deal with Vodacom. And if Vodacom has the best network, I have the best network.”

He said it doesn’t matter that Vodacom and MTN far outspend Cell C on capex each year, because the company will focus its efforts on urban areas and leave coverage in rural areas to roaming partner Vodacom.

“Cell C is not getting involved in a capex war,” Levy emphasised. “Every single year, MTN and Vodacom spend R8bn to R11bn; you can’t get into that (space).”

However, through infrastructure and spectrum sharing deals, which he said are “coming”, Cell C will be able to punch above its weight. “Capex is about focus. You can’t be everything to everybody. We will still spend R2.5bn to R3bn/year. It’s a good amount. We will focus on urban and LTE…”

Margins

He said Cell C will work to improve its operating margins to be closer to those enjoyed by Vodacom and MTN. “We will get a much more respectable level.”

He said the mobile operator doesn’t want to become the first or even the second biggest player in the market. But it will grow its service revenue market share from around 12-13% today to closer to 17-18% in a few years’ time.

“Anyone who doesn’t believe Cell C can grow at 4-5% (per year) over the next few years, watch this space,” Levy said. “We have spectrum and we have capacity. Those in themselves allow for 4-5% growth because we could do things Vodacom could never do — not because they don’t want to, but because they don’t have the spectrum or the capacity to do it.” — © 2017 NewsCentral Media